Israel Prohibits Cash Deals for Amounts Starting as Low as $1,700 – Finance Bitcoin News
New legislation introducing tighter restrictions on payments with large sums of cash will enter into force in Israel on Monday. The goal, as stated by the country’s tax authority, is to improve the fight against organized crime, money laundering, and tax evasion. Critics doubt the law will achieve that.
Authorities in Israel Go After Cash Purchases, Introduce Lower Limits
Payments of large sums of money in cash and bank checks will be further restricted in Israel by amendments set to take effect on Aug. 1. Tax officials want to further reduce the circulation of cash in the country, thus hoping to curb illegal activities such as the laundering of illicit funds and tax non-compliance, the Jerusalem Post reported.
Under the new legislation, companies will be required to use non-cash methods for any transaction exceeding 6,000 shekels ($1,700), a notable decrease from the previous ceiling of 11,000 shekels ($3,200). The cash limit for private individuals who are not registered as business owners will be 15,000 shekels (close to $4,400).
Reducing the use of cash is the main purpose of the law, according to Tamar Bracha, tasked with executing the rules on behalf of the Israel Tax Authority. Quoted by the Media Line news outlet, the official elaborated:
The goal is to reduce cash fluidity in the market, mainly because crime organizations tend to rely on cash. By limiting the use of it, criminal activity is much harder to carry out.
However, an attorney representing clients in an appeal against the law filed in 2018, when it was first adopted, insists that the main problem is that the legislation is not efficient. Uri Goldman referred to data showing that since the law’s initial introduction, the amount of cash has actually increased. Pointing to another of its downsides, the legal expert further explained:
When the bill passed there were over a million citizens without bank accounts in Israel. The law would prevent them from conducting any business and would, practically, turn 10% of the population into criminals.
An exemption for trading with Palestinians from the West Bank and charities active in the ultra-Orthodox communities has also sparked controversy. Deals with large amounts of cash will be allowed in these cases, provided they are thoroughly reported to the tax administration. Goldman thinks this is unfair to the rest of the society.
Finance Ministry Also Wants to Limit Private Cash Holdings
In its original draft, first proposed in 2015, the law also featured a provision limiting the private holding of large sums of cash to 50,000 shekels ($14,500). Although it was dropped at the time, Israel’s Ministry of Finance now plans to reintroduce it and let the parliament decide whether to adopt it after the upcoming elections.
Uri Goldman also believes that the authorities should at least allow people to declare their cash and deposit it to a bank account. That idea was suggested during preliminary discussions on the legislation as well, but never approved. Otherwise, cash will remain in circulation even if not used like before, he noted.
Meanwhile, the Bank of Israel has been exploring the option to issue a digital shekel, another form of the national fiat which is supposed to have cash-like features. The majority of the respondents in public consultations carried out by the monetary authority have been supportive of the plan, the results published in May revealed.
Do you think the new law will limit the use of cash in Israel? Share your expectations in the comments section below.
Image Credits: Shutterstock, Pixabay, Wiki Commons
Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.